Regulatory risk and the year ahead

MLex exclusive: India's antitrust landscape to transform in 2024 under amended law, top competition official says

India's antitrust landscape is set to transform in 2024 following the enactment of some of the key provisions under the 2023 Competition Amendment Act. Aimed at the "ease of doing business," these provisions will bring about sweeping changes and have far-reaching implications for the corporate world. Although the law was passed in 2023, the draft rules and regulations issued by the Competition Commission of India months ago have yet to be finalized. Regulations need to be "robust, clear and adaptable to the evolving economic landscape," the head of the antitrust watchdog told MLex® in an exclusive interview, as she commented on the sweeping changes the new year will bring.

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3 January 2024
By Freny Patel

India's corporate world is set to experience significant changes in 2024 due to the revamp of the country's antitrust law. The majority of the sweeping changes are yet to be enforced because the regulations and rules need to be formalized and notified. These changes hold far-reaching implications for the corporate sector, the antitrust watchdog and the development of India's jurisprudence.

The first female chairperson of the Competition Commission of India, or CCI, who took over the reins in May 2023 told MLex in an exclusive interview that her "immediate priority is to conclude public consultations with stakeholders to operationalize the reforms introduced through the recent amendments to India's competition law, put in place an appropriate regulatory framework and notify the regulations."

The 2023 Competition Amendment Act, enacted in April 2023, has given the CCI the tools it had been calling for to better regulate mergers and to handle immunity applications and commitments by companies facing antitrust probes, subject to the notification of rules, for which the authority sought the views of industry.

Tools that include the introduction of settlements and commitments, deal-value thresholds, and penalty guidelines, among others.

Although it has been months since the enforcer issued the draft regulations on some of the key provisions, CCI Chairperson Ravneet Kaur said that the time consumed in finalizing the regulations is necessary to ensuring that once notified, the regulations are well-suited to the needs of the market and stakeholders.

The CCI is open to refining the draft regulations "if required," in light of the feedback received from various stakeholders, which Kaur said is currently being analyzed.

"Our aim is to ensure the regulations are robust, clear and adaptable to the evolving economic landscape," Kaur told MLex.

Interestingly, being a part of the International Competition Network's 18-member steering committee, the CCI intends to ensure that "global antitrust policies are inclusive, taking into account the perspectives and challenges of emerging economies," she told MLex.

Various amendments to India's competition law are aimed at enhancing clarity and reducing the compliance burden for businesses. These are "major steps towards ease of doing business," Kaur said.

Although the CCI’s push to modernize the merger-control regime with the introduction of a deal-value threshold is in line with its global counterparts, the provision has not been viewed positively given its tendency to target large tech companies. Many of these are US-based tech majors — the likes of Apple, Google, and Meta Platforms — and are already under investigation across jurisdictions.

In response to these concerns, Kaur said it is immaterial where tech majors are located because the CCI's approach involves aligning the penalty guidelines with international norms while considering the specificities of the Indian market.

"We are closely monitoring developments in other jurisdictions to ensure our approach is consistent with global best practices, yet tailored to the unique aspects of India's digital economy," Kaur said.

The industry has also expressed concerns that the deal-value threshold, while aimed at capturing high-value "killer acquisitions" could end up catching unnecessary transactions due to the "look-back" and "look-forward" provisions adopted under the new law. The changes could negatively impact the startup economy, private equity funding and real-estate companies, among others.

Expand and upskill

Certain provisions of the revamped law — such as the introduction of a deal value threshold — are "expected to increase merger filings" and would increase the CCI's workload, the chairperson acknowledged.

"We are assessing and reviewing the staffing needs," Kaur said. The authority would need "additional manpower" for regulatory oversight and training to equip the existing staff "with the necessary skills to deal with various new challenges effectively," she added.

According to the CCI's website, the antitrust division comprises 15 officers and the merger control has 11 officers. The legal team consists of five officers, while the research and trend analysis team has six officers. The economics and advocacy divisions both have five officers each, and the international cooperation division has four officers.

Similarly, the digital unit within the CCI — aimed at improving the understanding and analysis of digital markets — will involve building capacity.

"We are focusing on building our capacity in data analytics, algorithmic understanding and digital market monitoring to ensure that our regulatory approach remains relevant and effective," Kaur said.

Clearing backlogs

The increased number of merger filings is "being assessed expeditiously," Kaur said, adding that antitrust matters have been prioritized.

As of the end of October, there were 138 pending cases with the CCI. Of these, 121 were related to antitrust while the remaining cases were about mergers and acquisitions. This data was shared by the Ministry of Corporate Affairs.

The CCI found itself hamstrung in its ability to make key decisions following a lack of a quorum of commissioners after the former chairman Ashok Kumar Gupta retired in October 2022. The enforcer now has a full quorum, following the appointment of three new commissioners in late 2023.

Cost of challenges rises

While Kaur said that the major changes to India's competition law are aimed at the "ease of doing business," the cost of challenging the orders of the antitrust watchdog has significantly increased. It’s now mandatory for parties to deposit 25 percent of the penalty amount imposed by the CCI as opposed to the earlier 10 percent when challenging its orders.

Although the idea of increasing the deposit amount is designed to discourage frivolous appeals and improve the CCI's efficiency, the increase in the penalty deposit makes appeals unaffordable for smaller players and potentially could impair their access to justice, antitrust lawyers fear.

Given the significant backlog of antitrust cases and the CCI's orders being reprimanded, increasing the cost of appeals might help. It will also go a long way toward improving jurisprudence.

Nine cases were remanded back to the CCI by the National Company Law Appellate Tribunal. The remand of orders by the appellate tribunal provides an opportunity for the antitrust watchdog to review and strengthen its decision-making processes, Kaur acknowledged.

The authority is focusing on enhancing the rigor of its analysis and ensuring that its findings and penalties are well substantiated. "This is critical to ensure that our orders are upheld in higher courts and that the penalties imposed achieve their intended deterrent effect," Kaur said.

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